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Q.

A price ceiling is a legal maximum price that can be charged for a good or service. Which of the following is a consequence of a price ceiling?

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a

No effect on the market

b

An increase in the quality of the good

c

A shortage of the good

d

A surplus of the good

answer is B.

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Detailed Solution

A price ceiling creates a shortage of the good, as the price is lower than the equilibrium price, leading to excess demand. Therefore, the correct option is B.

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